Women’s Wear Daily
04.23.2014
fashion-memopad
fashion-memopad

Memo Pad: Ouch, It Hurts... Holy Smokes...

Magazine publishers are already feeling the pinch from fears of a recession ¿ and many observers expect things to get worse before they get better.

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fashion-memopad/news
The controversial ad
OUCH, IT HURTS: Magazine publishers are already feeling the pinch from fears of a recession — and many observers expect things to get worse before they get better.

George Janson, managing partner, director of print for Mediaedge:cia, predicts it will be a challenging year, with perhaps minor growth in packaged goods. "If there is any overall growth, it will run between 0 and 2 percent," he said.

Deutsche Bank also maintains a cautious view on the prospects of consumer magazines this year. It expects revenue performance to continue to be constrained since structural pressures remain in key sectors, including automotive and men's lifestyle. According to a report from the bank last month, online revenues are growing quickly but aren't enough to offset erosion elsewhere in the business. "We believe the recent Emap consumer magazines sale for 9.5x EBITDA, compared with an average 11.3x EBITDA M&A multiple for the industry, is a clear indicator of the pressure on consumer magazine asset values at present," the report said.

Retail advertising is turning into a sore spot for many magazines — so what do fashion titles do when one of their key ad categories is down? Focus even more on luxury, it appears.

Valerie Salembier, senior vice president/publisher at Harper's Bazaar, said she just returned from Paris and the only concern she heard was how retail was going in the U.S. She added that, so far, the magazine has experienced no losses from luxury advertisers. Donna Lagani, senior vice president and publishing director at Cosmopolitan, agreed retail continues to be a tough category for the magazine, but added her ad base is diverse enough to offset a downturn in spending.

"If you read the papers, you see that retail is awfully vulnerable because of the comparable-store sales," said Lagani. Still, Kohl's, J.C. Penney, Sears and Wal-Mart are all advertising in Cosmo. "We don't have the reliance on the retail sector as other magazines with whom we compete. We've expanded in technology and packaged goods. There's a lot of money in that stuff." And the Hearst title is also picking up business that would normally go to TV, at least temporarily, thanks to the writers' strike: "One is a beauty client, two are packaged goods," Lagani said.
Talk of a possible recession isn't keeping Carlos Lamadrid, vice president and publisher of Woman's Day, up at night. He argued the magazine's core business is relatively resistant to economic woes. "Our big categories are pharmaceutical, beauty and packaged goods and food. Those are all recession-proof. With pharmaceuticals, you're sick, you need your meds, you take them. People will still eat no matter what. We're not talking gourmet, we're talking Kraft and Quaker. And beauty is a luxury that every woman will continue to indulge in. You may not buy a $600 pair of Gucci shoes, but a new lipstick still perks you up." Ad Age last week cited a Deutsche Bank report that found that cosmetics sales decreased 2.2 percent to $790.4 million during the fourth quarter of 2007, with lip treatments dropping 10.9 percent.

Lamadrid did concede that retail is a trickier prospect. "We carry some apparel, but it's been difficult to build that business, because their business is so soft. At the same time, if the consumer who was going more upmarket starts to come back to masstige, that presents an opportunity. Our reader is a Wal-Mart, J.C. Penney, Kohl's, Target shopper, and shop up toward Macy's, Bloomingdale's and Nordstrom."

GQ publisher Pete Hunsinger said retail sales are an issue and he sees some advertisers shifting their allocations a little in response. "People are holding off — if they did an eight-page insert last year, maybe they do a four-pager this year," he said. "If they did a spread, maybe they're doing a page."

He added GQ has actually added luxury auto accounts so far this year. The men's title was up a little in January, up 10 percent in February and slightly down in March.

Of course, some publishers expressed reason for optimism. Details publisher Chris Mitchell said after a slow start, his magazine's endemic businesses of fashion and retail "are so far holding or growing." He added the magazine had its best March and April ever this year. And Elle publisher Carol Smith said she's closed four record issues so far, calling upon the old saying that "things are never as good or as bad as they look." She added, "Despite the bleak headlines, luxury marketers — for the most part — haven't given up on consumers."
It remains to be seen how long that will be the case. One media buyer who works with luxury clients, particularly in Europe, emphasized global economic shifts over a U.S.-centric view. European brands, he said, were spooked by the devastating losses of the fraud at Société Général, and consumer confidence both domestically and internationally has been rattled.

The media buyer said advertisers' decision-making would likely be on the short term, with fewer long-term commitments. "We have people coming back from meetings and saying, 'We need a contingency plan. We need to hold back resources.'" — Amy Wicks, Irin Carmon and S.D.S.

HOLY SMOKES: Ellen von Unwerth has rankled her share of Catholic Bostonians by photographing what looks like a handful of nuns sketching a naked man for Equinox Fitness clubs' new campaign. After the ad appeared in Boston magazine earlier this week, angry callers and e-mailers started barraging the Back Bay club with complaints. Then the local media jumped on the story, further stoking the fires about the Fallon-made ads.

Terrence Donilon, a spokesman for the Boston Archdiocese, has called for an apology and wants the ads yanked. He told one news agency, "It's offensive to religious women who dedicate their lives for the good works of the church." But Equinox isn't headed for the confessional, and still plans to run the ad in Esquire and Vanity Fair. The company's spokeswoman, Judy Taylor, said, "The ads capture the energy and artistry of the well-conditioned body in a thought-provoking fashion, blending fantasy and impact." — Rosemary Feitelberg
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